Archive for the 'Lawsuits' Category

How judicial empathy harmed one small business.

Upon the announcement of the retirement of Associate Supreme Court Justice, David Souter, President Obama announced that he wanted to replace Souter with someone who has “that quality of empathy, of understanding and identifying with people’s hopes and struggles.”

Days later, the president made good on that promise by nominating Sonia Sotomayor to replace Souter. Based on Sotomayor’s past rulings, as well as comments in speeches and participating on panels, Mr. Obama accomplished his “empathy” goal. In a speech at Berkeley, Judge Sotomayor said, “I would hope that a wise Latina woman with the richness of her experiences would more often than not reach a better conclusion as a judge than a white male who hasn’t lived that life.”

How does empathy, gender, race or experience reconcile with what is no less than the cornerstone of American jurisprudence, blind justice? What would empathetic justice look like? In my career as a business owner, I’ve had some experience with an empathetic judge who chose to peek under the blindfold she swore to wear when ruling on petitions brought before her. Here is that true story.

A salesperson was hired by me to call on prospects and customers of a company I owned. Since I knew I would be giving him proprietary pricing and sales strategies that were the intellectual property of my company, I asked him to sign a non-compete agreement when he was offered the job. By accepting, if he should leave my company for any reason, he would have to forgo operating in my industry within a reasonable geography and time frame. He signed and went to work.

Less than two years later, I discovered that he was making plans to quit, and in fact had already started his own new company which would compete directly with my business. Worse, he was actually telling my customers about his new venture in an attempt to subvert sales to him. Not only was his future behavior going to violate the non-compete agreement, but his disloyalty is against the law in our state. Immediately after he was fired for this infidelity, he opened his competing business with a storefront location.

In the subsequent non-jury lawsuit I brought to enforce the non-compete agreement, the District Court judge, who just happened to be a woman, listened to the facts, reviewed the evidence and ruled in my favor. The defendant should cease and desist operating his business for the period and geography he originally agreed to. Alas, he continued operating his business, in defiance of the court order.

Within six months, we were able to bring the man before the judge again with the evidence of his continued violation of the agreement and the court order. But instead of throwing the book at the defendant, incredibly, the judge instead dismissed her earlier ruling against him. Her reason? She had since discovered that her daughter knew a member of the defendant’s extended family who, as a teenager, had been killed in an automobile accident a few years earlier. The judge went on to say that she now felt the family had been through enough and, essentially, she didn’t want to place any more hardship on them.

Thus, I came face-to-face with judicial empathy and found it violated a valid contract, disregarded testimony, facts and evidence and preempted the constitutional right of this American citizen to petition the court with an expectation of receiving blind justice. My brush with touchy-feely justice cost me a few thousand dollars in damages and legal fees. But if empathy as a basis for deciding cases at the Supreme Court level becomes reality, I fear it will undermine two of the cornerstones of our nation: the sanctity of a contract and the judicial system that for more than 200 years has been the model for the rest of the world.

Recently, on my small business radio program, The Small Business Advocate Show, I talked about my experience with judicial empathy. Take a few minutes to listen, and be sure to leave your own thoughts and experiences.

The evolution of small business dreams

The British playwright, William Archer (1856-1924), once remarked to a friend about how a “perfect plot” had played out to him and “evolved” in a dream one night. He saw “the whole thing, from beginning to end,” and when he awoke, put pen to paper.

Small business owners know about this kind of dream. It begins with what I call the founding dream, which is the first time an unconscious entrepreneurial inclination pops upon our consciousness radar screen.

At first a founding dream may be barely perceptible. And when one is remembered for the first time upon waking, the awareness is often more troubling than remarkable: What does this mean? What do I do with this?

But if the mind and the spirit are receptive, a founding dream “evolves” into more than a blip on the radar. Subsequent dreams become less impressionistic and more real. Animated dreams come next. Your nocturnal entrepreneurial visions play out with an actual cast of characters - sometimes in Technicolor.

Now you’re well aware of, and more comfortable with, your small business dreams and you start to do a little day dreaming. Day dreaming is the first step in the due diligence process - the research. You start asking lots of questions: What if….? How do I…? Where does this…? Who can…? When should…?

Ultimately, as the answers to these questions are revealed and accumulate, you begin to make your entrepreneurial dream become reality; you actually start living the dream of owning your own business. At this point the start-up dreams will stop. Since you’re now living your dream, why dream about it, right?!

Your founding dream now has a name, address, phone number and a tax ID number. It has “evolved” into the “perfect plot” for your small business.

Small business success through life-long learning

In the second century B.C., the Roman statesman, Cato, began learning Greek at the age of 75. When asked why he was undertaking such a challenging educational enterprise at his advanced age, he replied, “This is the youngest age I have.”

No matter what we do, no matter where we go, owner or employee, and now more than ever before, we must continue to study, train and learn. Everyone in your organization. Everyone. Everyday. Life-long learning.

Are you feeling threatened, maybe even frightened these days with all of the economic challenges, plus the changes brought on by the advent of the information age? Me, too. Sometimes it seems we’re like Alice - running as hard as we can just to stay in one place. And in our Wonderland, everything is changing so fast that what we learned today may be obsolete tomorrow.

The irony is that the thing that is creating so much potential for anxiety is also the thing that can help you stay competitive: Technology. Specifically, the unprecedented wealth of information available on the Internet.

When I feel threatened by all of the new knowledge and capability that’s emerging, I just make a point to learn something new everyday, with emphasis on social media and e-commerce, or how my industry is adapting to the virtual marketplace. Anything. And when I acquire that new understanding or capability, I smile like Alice’s Cheshire Cat because learning makes me feel stronger, as if I’ve gained a little ground in the marketplace. Maybe today I put the heat on a competitor. Advantage: Me.

Give it a try. The only thing better than your garden variety smile is one that comes from knowing that you just got a little smarter. And remember the wisdom of the statesman: This is the youngest age you have.

Recently, on my small business radio program, The Small Business Advocate Show, I talked about this topic with e-learning expert, Anita Rosen, author of “e-Learning 2.0,” and one of our outstanding Brain Trust members. Take a few minutes to listen to what this smart lady had to say. And, of course, be sure to leave a comment.

Small business and the “Loser Pays” legal system

A recent study concluded that more is spent on the administration of civil lawsuits in America – not the total amount of the settlements, just the administration – than what Americans spend on automobiles each year. Here’s more: The U.S. Chamber has estimated that frivolous lawsuits cost small businesses $88 billion annually. But here’s the real sad news: Just one of these lawsuits – even one with no merit that in the end the plaintiff loses – can put a small business in jeopardy just in the cost of defending themselves.

So what is the answer to this plague? Well, incremental tort reform is one. For example, there has been significant reform in the past couple of years with regard to making class action suits less easy to bring. But what we need, it seems to me, is a wholesale change in the system.

Our current system, called the American Rule, requires for each party in a lawsuit to pay their own costs. It might surprise you to learn that this system is not the norm around the globe. In fact, it is in the minority if not unique to the U.S. The Europeans, and many other countries, use the “Loser Pays” system, which, by definition, requires that if you pursue a lawsuit and lose, you pay both sides of the legal bills. As you can imagine, only serious suits are pursued.

There are few elements of the European marketplace that I covet for Americans, but the lone exception to this stance is the Loser Pays system. One way the Obama administration could sell its universal health care system plans would be to package it with a conversion to Loser Pays.

Recently, on my radio program, The Small Business Advocate Show, I interviewed Marie Gryphon with the Manhattan Institute, an expert on the American Rule vs Loser Pays debate, and she had some excellent points to make which I encourage you to listen to. And of course, I encourage you to leave a comment or question.

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